ATHENS/ROME, Dec 13 (Reuters) - Southern Europe's
once-legendary pensions which allowed some lucky workers to
retire young in subsidised comfort are dying out fast, but still
far fewer Greeks and Italians work into their sixties than their
neighbours to the north.

An age of austerity means that the state-funded right for
some to enjoy the good life in their fifties, with plenty of
"hardship" allowances, will soon be consigned to the past.

Germans, who work more into their sixties than most other
Europeans, particularly resent stories of golden Greek
state-funded pensions while they are funding bailouts for the
near-bankrupt nation.

But while Italy has yet to dismantle many of its generous
pension arrangements, little remains of a Greek system which
once classified hairdressing as an "arduous and hazardous"
occupation that merited special payments.

Before reforms introduced last month, Greek barbers and
hairstylists who had turned 60 took home an average pension of
about 800 euros after working just 15 years.

Some could even retire on a reduced pension at just 40
before last year, when another sweeping pension reform
prescribed by the country's international lenders took place.

Those days are over. Greece's international lenders, the
European Union and IMF, are applying heavy pressure on the
government to tackle a huge budget deficit.

Last month, Greece struck hairdressers off the list of jobs
deemed "arduous and hazardous" under a reform aimed at curbing
early retirement and supporting a tottering pension system.

HAIRDRESSERS UNIMPRESSED

Hairdressers are unimpressed. Katerina Ilia, a 44-year-old
mother of two who spends most of the day in her tiny central
Athens salon with pink walls, protested.

"It's not fair ... I've been working for almost 30 years and
doctors always advise me to quit," said Ilia, who says she
suffers from respiratory and skin allergies after years of
handling chemicals found in hair dye products.

"I wear gloves but it doesn't do much and when I use
hairspray I often feel I can't breathe afterwards," she said as
she dyed the hair of a 70-year-old woman. "People think it's
easy but they don't realise that we are on our feet all day."

Now, Greek barbers cannot retire before turning 65 - the
statutory retirement age after the sweeping pension reform -
unless they have worked for at least 40 years.

In fact, fewer than 10 percent of Greece's nearly 5 million
workers will now be able to retire before 65. Last year's
reform in a country where all pensions are state-funded put men
and women, who could retire as early as 40, on equal footing.

This will mean big changes in the way Greeks live, at least
the ones who still have jobs as unemployment soars while the
nation suffers under its fourth year of recession.

At the moment just 40.7 percent of Greeks aged between 55
and 64 are in work. That compares with 59.9 percent of people in
Germany, which is the biggest contributor to EU bailouts for
Greece, Ireland and Portugal, according to EU statistics.

While such figures are affected by big differences in
unemployment rates, they still aggravate many ordinary Germans,
whose views are often expressed by the mass-circulation Bild
newspaper in outraged headlines.

STILL THEY INSULT US

Feelings ran high earlier this year when protesters in
Athens used Nazi banners to criticise German Chancellor Angela
Merkel's insistence on strict terms for the Greek bailout. "We
pay - and still get insulted!" said Bild.

Nordic countries have the highest proportion of elderly
workers. In Iceland, which suffered its own financial crisis in
2008, no fewer than 77.5 percent of 55-64 year-olds still work.

That compares with an EU average of 47.5 percent, not to
mention Italians who are near the bottom of the European league
on just 37.4 percent.

Austerity has come later to Italians than the Greeks but
many of them are still having to say farewell to the dolce vita,
at least at an early age.

Italy has a low employment rate across the age groups,
partly due to high youth unemployment and a relatively low
proportion of women in work.

However, since the mid-1990s, Italy has been progressively
tightening up what was the most generous pension system in
Europe in terms of early retirement age and payouts.

Italy's public spending on pensions, at over 16 percent of
gross domestic product, still compares with an EU average of 11
percent and is the highest in the bloc. This reflects an elderly
population and previously unsustainable rules which allowed
millions of workers to retire in their fifties with a pension
based on their end of career salary.

For most Italians those heady days are over. Under the
latest reform, pensions will be calculated strictly according to
contributions paid into the system and the retirement age will
be set at 66, or after payment of 43 years of contributions.

However, many workers still benefit at least partly from the
previous generous terms that are being phased out, and special
conditions for some workers remain untouched as yet.

For instance, the average pension of Italian airline
employees in 2010 was 45,000 euros a year, far above the
national average of 10,600. Special terms for pilots and cabin
crew allow some employees to retire as young as 53.

"Of course the pilots get much more than us, and we'll all
get less when the pensions are completely contribution-based,"
said Alberto Mazzali, a 47-year-old Alitalia steward. Mazzali
joined Alitalia at 27 and expects to retire at 57 on a pension
of around 1,300 euros per month.